Reidar Visser on the New Iraqi Budget

The following article was published on Sunday by Reidar Visser, an historian of Iraq educated at the University of Oxford and currently based at the Norwegian Institute of International Affairs. It is reproduced here with the author’s permission. The opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

After a marathon session in the Iraqi parliament, Iraqi politicians today [Sunday] passed the budget for 2011.

The key figures are as follows: Income, 80.9 trillion Iraqi dinars (ID); expenditure, 96.6 trillion ID (of which 30 trillion ID is investment); deficit 15.7 trillion ID. The budget is based on an expected daily oil export of 2,2 million barrels and an oil price of USD 76.5 per barrel.

The big money in this budget goes to the central government in Baghdad and the Kurdish Regional Government, underlining the asymmetrical nature of Iraq’s federalism despite constitutional provisions that arguably could have given the unfederated governorates more rights and money. The biggest single ministry spending post is defence and security with 14 trillion; unless it is a typo education will get 9 trillion which seems generous compared with the military spending. It is interesting that the petrodollar scheme that was introduced in 2010 and gave a dollar for each barrel of exported oil to the producing governorates is perpetuated (to total some 1.6 trillion ID), and will also include petrodollars that accrued in 2010 but have yet to be spent. There had been some discussion that the scheme would be made universal to all of Iraq at the expense of the producing governorates, but instead the two ideas appear to have been merged into one as the ministry of finance is given the task of allocating additional petrodollars based on national production to all governorates based on population (i.e. a lot less per governorate than the producing governorates get under the original scheme). Kurdistan is excepted from the petrodollar arrangement until it has sent in an audited account of its oil-industry activities for 2010–2011.